Stocks on Bursa Malaysia ended lower yesterday on weak buying momentum amid external volatility as sentiment remained cautious ahead of the start of the second quarter 2013 results season this week, and investors were also getting nervous ahead of the US Federal Reserve Chairman Ben S. Bernanke's speech on monetary policy scheduled for July 11. The FBM KLCI succumbed to profit taking to settle at 1,762.87, down 9.4 points or 0.53%. The benchmark index hovered between 1,762.87 and 1,774.67 after opening 0.6 of a point better at 1,772.87. Market breadth was negative, with 431 gainers, 314 losers, 291 counters unchanged. Turnover stood at 1.37 billion shares worth RM1.57 billion versus last Friday's 1.63 billion shares worth RM1.96 billion.
The FBM KLCI opened 0.6 points higher at 1,772.87 and surged to the intra-day high of 1,774.67 within the first twenty minutes after opening. The key index slipped on heavy profit-taking activity for the rest of the day to close at 1,762.87, the lowest point for the day. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates heavy selling pressure and the bears were in control. The appearance of this bearish black candlestick confirmed the reversal signal issued by the black inverted hammer candlestick formed last Friday, and hence, the FBM KLCI is likely to further correct downward. Immediate downside support is at 1,760, follow by the psychological support level at 1,750.
MACD has turned down, and its histogram also contracted for the first time after expanding for four bars, indicating the upward momentum has turned weak and the possible beginning of a bearish down move. RSI (14) hooked downward to 49.9 from 54.4, indicating the key index has turned mildly bearish for the short term. Stochastic was lower at 76.8 from 80.4, and has crossed below the slow stochastic line, issuing a sell signal, and indicating the beginning of a short term down cycle. Readings from the indicators showed that the FBM KLCI has turned weak and is likely to further consolidate itself.
The immediate short term trend of the FBM KLCI has turned down as the key index has closed below the immediate horizontal support line of 1,765 as well as below the 5 and 30-day SMA. Hence, the FBM KLCI is likely to further correct downward with immediate downside support provided by the 10-day SMA at 1,761. A break of this support level will likely see the key index slipping lower to the 60-day SMA support at 1,753. Nonetheless, the longer term trend of the FBM KLCI is still up, and for the short to medium term, it is likely to continue to stay range-bound with a downward bias within the range defined by the trend channel.
Overnight, the Dow rose 88.85 points or +0.59% to close at 15,224.69. Today, the FBM KLCI is likely to trade within a range of 1,747 to 1,786.
This week's expected range: 1755 – 1790
Today’s expected range: 1747 – 1786
Resistance: 1770, 1778, 1786
Support: 1747, 1755, 1758
Stocks to watch: AZRB, COASTAL, HANDAL, PENERGY, SCOMIEN, SYMLIFE, TGOFFS, WASEONG